– Q2 2023 Revenues of $238.0 million, Net Loss of $36.4 million,
and Adjusted EBITDA of $152.7 million
– Identified potential medical cost savings of approximately
$5.7 billion in Q2 2023, up 2% from Q1 2023
– In Q2 2023, acquired Benefits Science Technologies, a leading
data science company, and partnered with ECHO Health to offer a B2B
healthcare payments service
MultiPlan Corporation (“MultiPlan” or the “Company”) (NYSE:
MPLN), a leading value-added provider of data analytics and
technology-enabled end-to-end cost management, payment, and revenue
integrity solutions to the U.S. healthcare industry, today reported
financial results for the second quarter ended June 30, 2023.
“The second quarter marked an inflection point for MultiPlan,”
said Dale White, CEO of MultiPlan. “We executed on several key
initiatives within our Growth Plan. These included the acquisition
of Benefits Science Technologies (“BST”), which accelerates our new
Data & Decision Science service line, and our new partnership
with ECHO Health, which adds a B2B healthcare payments service to
our suite of solutions. These actions, along with further progress
we have made toward the launch of several new products to enhance
our core business, position us for growth in 2024 and set us on a
path of transformation over the next several years.”
“Also, a normalizing volume environment and favorable savings
mix helped us deliver second quarter results at the high end of our
expectations and in-line with our prior quarter, providing a solid
baseline for the second half of 2023,” Mr. White continued. “Based
on our second quarter results and our expectations for the second
half, we are modestly increasing the midpoint of our revenue
guidance range for full-year 2023, before the contribution of
BST.”
Mr. White concluded, “As we move forward, we remain
laser-focused on executing the plan we outlined at our Investor Day
in June: leveraging the enormous strength of our platform;
transforming our business by expanding our products and services;
and unlocking the value of our franchise by accelerating our
growth, diversifying our revenues, and improving our capital
structure.”
Business and Financial Highlights
- Revenues of $238.0 million for Q2 2023, a decrease of 18.0%,
compared to revenues of $290.1 million for Q2 2022. BST contributed
$2.1 million to revenues in Q2 2023, reflecting a partial quarter
since the close of the acquisition on May 8, 2023.
- Net loss of $36.4 million for Q2 2023, compared to net income
of $13.5 million for Q2 2022.
- Adjusted EBITDA of $152.7 million for Q2 2023, compared to
Adjusted EBITDA of $209.6 million for Q2 2022.
- Net cash provided by operating activities of $7.7 million for
Q2 2023, compared to net cash provided by operating activities of
$40.7 million for Q2 2022.
- Free Cash Flow of $(24.3) million for Q2 2023, compared to Free
Cash Flow of $21.8 million for Q2 2022.
- In Q2 2023, the Company used $141.3 million of cash for the
acquisition of Benefits Science LLC (“Benefits Science
Technologies” or “BST”) and used $7.4 million to repurchase shares
of its common stock in the open market.
- The Company ended Q2 2023 with $89.8 million of cash and cash
equivalents on the balance sheet.
- The Company processed approximately $43.1 billion in claim
charges during the second quarter of 2023, identifying potential
medical cost savings of approximately $5.7 billion.
2023 Financial Guidance1
The Company is updating its Full Year 2023 guidance, as detailed
in the table below:
Financial Metric
Prior FY 2023 Guidance (excluded
BST)
Updated FY 2023 Guidance (includes
BST)
Revenues
$925 million to $975 million
$950 million to $980 million
Adjusted EBITDA1
$600 million to $650 million
$615 million to $635 million
Interest expense
$325 million to $340 million
$325 million to $335 million
Cash flow from operations2
$175 million to $215 million
$160 million to $190 million
Capital expenditures
$100 million to $115 million
$110 million to $120 million
Depreciation
$70 million to $75 million
$70 million to $75 million
Amortization of intangible assets
$335 million to $345 million
$340 million to $345 million
Effective tax rate
25% to 28%
25% to 28%
Our updated FY 2023 guidance includes approximately $12 million
of revenues and adjusted EBITDA of $(2) million from the
contribution of BST post-closing of the transaction.
The Company anticipates Q3 2023 revenues between $235 million
and $250 million and Adjusted EBITDA1 between $150 million and $160
million.
Conference Call Information
The Company will host a conference call today, Wednesday, August
2, 2023 at 10:00 a.m. U.S. Eastern Time (ET) to discuss its
financial results. Investors and analysts are encouraged to
pre-register for the conference call by using the link below.
Participants who pre-register will receive access details via
email. Pre-registration may be completed at any time up to and
following the call start time.
To pre-register, go to:
https://www.netroadshow.com/events/login?show=1b7fdc10&confId=52126.
A live webcast of the conference call can be accessed through
the Investor Relations section of the Company’s website at
investors.multiplan.com/events-and-presentations. Participants
should join the webcast ten minutes prior to the start of the
conference call. The earnings press release and a supplemental
slide deck will also be available on this section of the Company’s
website.
For those unable to listen to the live conference call, a replay
will be available approximately two hours after the call through
the archived webcast on the Investor Relations section of the
Company’s website or by dialing (866) 813-9403 or (929) 458-6194.
The replay access code is 964758.
About MultiPlan
MultiPlan is committed to helping healthcare payors manage the
cost of care, improve their competitiveness, and inspire positive
change. Leveraging sophisticated technology, data analytics, and a
team rich with industry experience, MultiPlan interprets customers'
needs and customizes innovative solutions that combine its payment
and revenue integrity, network-based, and analytics-based services.
MultiPlan is a trusted partner to over 700 healthcare payors in the
commercial health, government, and property and casualty markets.
For more information, visit www.multiplan.com.
Forward Looking Statements
This press release includes statements that express our
management’s opinions, expectations, beliefs, plans, objectives,
assumptions, or projections regarding future events or future
results and therefore are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements can generally be
identified by the use of forward-looking terminology, including the
terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,”
“projects,” “forecasts,” “intends,” “plans,” “may,” “will,” or
“should” or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include
all matters that are not historical facts. They appear in a number
of places throughout this press release, including the discussion
of 2023 outlook and guidance, plans to expand or enhance the
Company’s products and service lines, and the long-term prospects
of the Company. Such forward-looking statements are based on
available current market information and management’s expectations,
beliefs and forecasts concerning future events impacting the
business. Although we believe that these forward-looking statements
are based on reasonable assumptions at the time they are made, you
should be aware that these forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our
control) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. These factors include:
the ongoing COVID-19 pandemic and its related effects on our
results of operations, financial performance, liquidity or other
financial metrics; loss of our customers, particularly our largest
customers; trends in the U.S. healthcare system, including recent
trends of unknown duration of reduced healthcare utilization and
increased patient financial responsibility for services; inability
to preserve or increase our existing market share or the size of
our preferred provider networks; effects of competition; effects of
pricing pressure; the inability of our customers to pay for our
services; decreases in discounts from providers; the loss of our
existing relationships with providers; the loss of key members of
our management team or inability to maintain sufficient qualified
personnel; pressure to limit access to preferred provider networks;
the ability to achieve the goals of our strategic plans and
recognize the anticipated strategic, operational, growth and
efficiency benefits when expected; our ability to enter new lines
of business and broaden the scope of our services; our ability to
identify, complete and successfully integrate acquisitions; our
ability to obtain additional financing; changes in our industry and
in industry standards and technology; interruptions or security
breaches of our information technology systems and other
cybersecurity attacks; our ability to protect proprietary
information, processes and applications; our ability to maintain
the licenses or rights of use for the software we use; our
inability to expand our network infrastructure; changes in
accounting principles or the incurrence of impairment charges; our
ability to remediate any material weaknesses or maintain effective
internal controls over financial reporting; our ability to continue
to attract, motivate and retain a large number of skilled
employees, and adapt to the effects of inflationary pressure on
wages; changes in our regulatory environment, including healthcare
law and regulations; the expansion of privacy and security laws;
heightened enforcement activity by government agencies; our ability
to pay interest and principal on our notes and other indebtedness;
lowering or withdrawal of our credit ratings; the possibility that
we may be adversely affected by other political, economic,
business, and/or competitive factors; adverse outcomes related to
litigation or governmental proceedings; other factors disclosed in
our Securities and Exchange Commission (“SEC”) filings from time to
time, including, without limitation, those factors described in our
Annual Report on Form 10-K for the fiscal year ended December 31,
2022 and our Quarterly Report for the three months ended March 31,
2023; and other factors beyond our control. Should one or more of
these risks or uncertainties materialize, or should any of the
assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking
statements.
There can be no assurance that future developments affecting our
business will be those that we have anticipated. Forward-looking
statements speak only as of the date made.
We do not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance
with generally accepted accounting principles in the United States
(“GAAP”), this press release contains certain non-GAAP financial
measures, including EBITDA, Adjusted EBITDA, Free Cash Flow,
Unlevered Free Cash Flow and Adjusted Cash Conversion Ratio. A
non-GAAP financial measure is generally defined as a numerical
measure of a company’s financial or operating performance that
excludes or includes amounts so as to be different than the most
directly comparable measure calculated and presented in accordance
with GAAP.
EBITDA, Adjusted EBITDA, Free Cash Flow, Unlevered Free Cash
Flow and Adjusted Cash Conversion Ratio are supplemental measures
of MultiPlan’s performance that are not required by or presented in
accordance with GAAP. These measures are not measurements of our
financial or operating performance under GAAP, have limitations as
analytical tools and should not be considered in isolation or as an
alternative to net income, cash flows or any other measures of
performance prepared in accordance with GAAP.
EBITDA represents net income before interest expense, interest
income, income tax provision, depreciation, amortization of
intangible assets, and non-income taxes. Adjusted EBITDA is EBITDA
as further adjusted by certain items as described in the table
below.
In addition, in evaluating EBITDA and Adjusted EBITDA you should
be aware that, in the future, we may incur expenses similar to the
adjustments in the presentation of EBITDA and Adjusted EBITDA. The
presentation of EBITDA and Adjusted EBITDA should not be construed
as an inference that our future results will be unaffected by
unusual or non-recurring items. The calculations of EBITDA and
Adjusted EBITDA may not be comparable to similarly titled measures
reported by other companies. Based on our industry and debt
financing experience, we believe that EBITDA and Adjusted EBITDA
are customarily used by investors, analysts and other interested
parties to provide useful information regarding a company’s ability
to service and/or incur indebtedness.
We also believe that Adjusted EBITDA is useful to investors and
analysts in assessing our operating performance during the periods
these charges were incurred on a consistent basis with the periods
during which these charges were not incurred. Both EBITDA and
Adjusted EBITDA have limitations as analytical tools, and you
should not consider either in isolation, or as a substitute for
analysis of our results as reported under GAAP. Some of the
limitations are:
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs;
- EBITDA and Adjusted EBITDA do not reflect interest expense, or
the cash requirements necessary to service interest or principal
payments on our debt;
- EBITDA and Adjusted EBITDA do not reflect our tax expense or
the cash requirements to pay our taxes; and
- Although depreciation and amortization are non-cash charges,
the tangible assets being depreciated will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements.
MultiPlan’s presentation of Adjusted EBITDA should not be
construed as an inference that our future results and financial
position will be unaffected by unusual items.
Free Cash Flow is defined as net cash provided by operating
activities less capital expenditures, all as disclosed in the
Statements of Cash Flows. Unlevered Free Cash Flow is defined as
net cash provided by operating activities less capital
expenditures, plus cash interest paid, all as disclosed in the
Statements of Cash Flows. Free Cash Flow and Unlevered Free Cash
Flow are measures of our operational performance used by management
to evaluate our business after purchases of property and equipment
and, in the case of Unlevered Free Cash Flow, prior to the impact
of our capital structure. Free Cash Flow and Unlevered Free Cash
Flow should be considered in addition to, rather than as a
substitute for, consolidated net income as a measure of our
performance and net cash provided by operating activities as a
measure of our liquidity. Additionally, MultiPlan’s definitions of
Free Cash Flow and Unlevered Free Cash Flow are limited, in that
they do not represent residual cash flows available for
discretionary expenditures, due to the fact that the measures do
not deduct the payments required for debt service, in the case of
Unlevered Free Cash Flow, and other contractual obligations or
payments made for business acquisitions.
Adjusted Cash Conversion Ratio is defined as Unlevered Free Cash
Flow divided by Adjusted EBITDA. MultiPlan believes that the
presentation of the Adjusted Cash Conversion Ratio provides useful
information to investors because it is a financial performance
measure that shows how much of its Adjusted EBITDA MultiPlan
converts into Unlevered Free Cash Flow.
MULTIPLAN
CORPORATION
Unaudited Condensed
Consolidated Balance Sheets
(in thousands, except share and
per share data)
June 30, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
89,757
$
334,046
Restricted cash
6,137
6,513
Trade accounts receivable, net
69,904
78,907
Prepaid expenses
20,523
22,244
Prepaid taxes
17,195
1,351
Other current assets, net
5,512
3,676
Total current assets
209,028
446,737
Property and equipment, net
248,732
232,835
Operating lease right-of-use assets
22,618
24,237
Goodwill
3,829,356
3,705,199
Other intangibles, net
2,805,148
2,940,201
Other assets, net
21,508
21,895
Total assets
$
7,136,390
$
7,371,104
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
15,489
$
13,295
Accrued interest
56,866
57,982
Operating lease obligation, short-term
5,322
6,363
Current portion of long-term debt
13,250
13,250
Accrued compensation
28,413
34,568
Accrued legal contingencies
12,423
33,923
Other accrued expenses
15,641
16,463
Total current liabilities
147,404
175,844
Long-term debt
4,603,583
4,741,856
Operating lease obligation, long-term
19,716
20,894
Private Placement Warrants and Unvested
Founder Shares
4,836
2,442
Deferred income taxes
592,331
639,498
Other liabilities
—
28
Total liabilities
5,367,870
5,580,562
Commitments and contingencies (Note 6)
Shareholders’ equity:
Shareholder interests
Preferred stock, $0.0001 par value —
10,000,000 shares authorized; no shares issued
—
—
Common stock, $0.0001 par value —
1,500,000,000 shares authorized; 667,381,255 and 666,290,344
issued; 649,480,795 and 639,172,938 shares outstanding
67
67
Additional paid-in capital
2,338,509
2,330,444
Retained deficit
(443,771
)
(347,800
)
Treasury stock — 17,900,460 and 27,117,406
shares
(126,285
)
(192,169
)
Total shareholders’ equity
1,768,520
1,790,542
Total liabilities and shareholders’
equity
$
7,136,390
$
7,371,104
MULTIPLAN
CORPORATION
Unaudited Condensed
Consolidated Statements of (Loss) Income and Comprehensive (Loss)
Income
(in thousands, except share and
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
$
237,991
$
290,128
$
474,585
$
588,174
Costs of services (exclusive of
depreciation and amortization of intangible assets shown below)
59,007
49,977
113,857
97,049
General and administrative expenses
39,750
40,085
71,217
72,673
Depreciation
18,901
17,171
37,107
33,767
Amortization of intangible assets
85,626
85,127
170,753
170,281
Total expenses
203,284
192,360
392,934
373,770
Operating income
34,707
97,768
81,651
214,404
Interest expense
82,475
72,696
165,903
144,141
Interest income
(2,366
)
(46
)
(5,605
)
(58
)
Gain on extinguishment of debt
—
—
(36,778
)
—
Gain on investments
—
—
—
(289
)
Loss (gain) on change in fair value of
Private Placement Warrants and Unvested Founder Shares
763
5,149
2,394
(7,592
)
Net (loss) income before taxes
(46,165
)
19,969
(44,263
)
78,202
(Benefit) provision for income taxes
(9,795
)
6,457
(8,102
)
20,712
Net (loss) income
$
(36,370
)
$
13,512
$
(36,161
)
$
57,490
Weighted average shares outstanding –
Basic
643,339,328
639,001,506
640,996,659
638,750,938
Weighted average shares outstanding –
Diluted
643,339,328
640,097,349
640,996,659
639,709,247
Net (loss) income per share – Basic
$
(0.06
)
$
0.02
$
(0.06
)
$
0.09
Net (loss) income per share – Diluted
$
(0.06
)
$
0.02
$
(0.06
)
$
0.09
Comprehensive (loss) income
$
(36,370
)
$
13,512
$
(36,161
)
$
57,490
MULTIPLAN
CORPORATION
Unaudited Condensed
Consolidated Statements of Cash Flows
(in thousands)
Six Months Ended June
30,
2023
2022
Operating activities:
Net (loss) income
$
(36,161
)
$
57,490
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
37,107
33,767
Amortization of intangible assets
170,753
170,281
Amortization of the right-of-use asset
2,865
3,339
Stock-based compensation
8,522
7,234
Deferred income taxes
(47,167
)
(59,481
)
Non-cash interest costs
5,106
5,192
Gain on extinguishment of debt
(36,778
)
—
Gain on equity investments
—
(289
)
Loss on disposal of property and
equipment
243
2,785
Loss (gain) on change in fair value of
Private Placement Warrants and Unvested Founder Shares
2,394
(7,592
)
Changes in assets and liabilities:
Accounts receivable, net
11,056
5,900
Prepaid expenses and other assets
522
9,888
Prepaid taxes
(15,844
)
5,064
Operating lease obligation
(3,513
)
(5,403
)
Accounts payable, accrued expenses, legal
contingencies and other
(27,205
)
7,464
Net cash provided by operating
activities
71,900
235,639
Investing activities:
Purchases of property and equipment
(55,095
)
(43,399
)
Proceeds from sale of investment
—
289
Purchase of equity investments
—
(15,000
)
BST Acquisition, net of cash acquired
(141,294
)
—
Net cash used in investing activities
(196,389
)
(58,110
)
Financing activities:
Repurchase of 5.750% Notes
(99,954
)
—
Repayments of Term Loan B
(6,625
)
(6,625
)
Taxes paid on settlement of vested share
awards
(457
)
(2,196
)
Purchase of treasury stock
(13,140
)
—
Net cash used in financing activities
(120,176
)
(8,821
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(244,665
)
168,708
Cash, cash equivalents and restricted cash
at beginning of period
340,559
188,379
Cash, cash equivalents and restricted cash
at end of period
$
95,894
$
357,087
Cash and cash equivalents
$
89,757
$
354,310
Restricted cash
6,137
2,777
Cash, cash equivalents and restricted cash
at end of period
$
95,894
$
357,087
Noncash investing and financing
activities:
Purchases of property and equipment not
yet paid
$
4,206
$
4,589
Operating lease right-of-use assets
obtained in exchange for operating lease liabilities
$
—
$
40
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest
$
(161,484
)
$
(139,013
)
Income taxes, net of refunds
$
(55,533
)
$
(72,452
)
MULTIPLAN
CORPORATION
Calculation of EBITDA and
Adjusted EBITDA
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income (loss)
$
(36,370
)
$
13,512
$
(36,161
)
$
57,490
Adjustments:
Interest expense
82,475
72,696
165,903
144,141
Interest income
(2,366
)
(46
)
(5,605
)
(58
)
(Benefit) provision for income taxes
(9,795
)
6,457
(8,102
)
20,712
Depreciation
18,901
17,171
37,107
33,767
Amortization of intangible assets
85,626
85,127
170,753
170,281
Non-income taxes
662
440
1,003
993
EBITDA
$
139,133
$
195,357
$
324,898
$
427,326
Adjustments:
Other expenses, net(1)
353
2,543
238
1,653
Integration expenses
788
1,024
1,831
2,696
Change in fair value of Private Placement
Warrants and unvested founder shares
763
5,149
2,394
(7,592
)
Transaction-related expenses
6,818
1,457
7,836
4,012
Gain on extinguishment of debt
—
—
(36,778
)
—
Gain on investments
—
—
—
(289
)
Stock-based compensation
4,827
4,104
8,522
7,234
Adjusted EBITDA
$
152,682
$
209,634
$
308,941
$
435,040
(1) "Other expenses, net" represent miscellaneous non-recurring
income, miscellaneous non-recurring expense, gain or loss on
disposal of assets, impairment of other assets, gain or loss on
disposal of leases, tax penalties, and non-integration related
severance costs.
Calculation of Unlevered Free
Cash Flow and Adjusted Cash Conversion Ratio
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
7,685
$
40,702
$
71,900
$
235,639
Purchases of property and equipment
(31,994
)
(18,945
)
(55,095
)
(43,399
)
Free Cash Flow
(24,309
)
21,757
16,805
192,240
Interest paid
99,767
92,816
161,484
139,013
Unlevered Free Cash Flow
$
75,458
$
114,573
$
178,289
$
331,253
Adjusted EBITDA
$
152,682
$
209,634
$
308,941
$
435,040
Adjusted Cash Conversion Ratio
49
%
55
%
58
%
76
%
Net cash used in investing activities
$
(173,288
)
(33,945
)
$
(196,389
)
$
(58,110
)
Net cash used in financing activities
$
(10,739
)
(3,551
)
$
(120,176
)
$
(8,821
)
_______________________________________________________ 1 We
have not reconciled the forward-looking Adjusted EBITDA guidance
included above to the most directly comparable GAAP measure because
this cannot be done without unreasonable effort due to the
variability and low visibility with respect to certain costs, the
most significant of which are incentive compensation (including
stock-based compensation), transaction-related expenses, and
certain fair value measurements, which are potential adjustments to
future earnings. We expect the variability of these items to have a
potentially unpredictable, and a potentially significant, impact on
our future GAAP financial results. 2 Cash flow from operations
guidance includes the impact of approximately $22 million that
MultiPlan paid in Q1 2023 in connection with the settlement of our
previously disclosed Delaware stockholder litigation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802567068/en/
Investor Relations Contact Luke Montgomery, CFA SVP,
Finance & Investor Relations MultiPlan 866-909-7427
investor@multiplan.com Shawna Gasik AVP, Investor Relations
MultiPlan 866-909-7427 investor@multiplan.com
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